Sir David Garrard, who used to run the Minerva property empire, gave the party
a £500,000 donation in the past few months.

Labour has benefited from a near-£1million loan and donation from a millionaire businessman who was embroiled in the cash for peerages scandal nearly 10 years ago.

Sir David Garrard, who used to run the Minerva property empire, gave the party a £500,000 donation in the past few months.

The figure - which is yet to be made public by the Electoral Commission - is comfortably Sir David’s biggest ever single donation to Labour. Previously he has donated £610,000 in three donations going back to 2003.

Sir David said he was donating because he had “come to know, respect and admire Ed Miliband. He has the vision and conviction to improve the lives of us all”.

Separately Sir David also asked Labour to stop making payments on a £2.3million loan which he made weeks before the 2005 general election.

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The effect of Sir David’s request according to the party’s latest accounts means that the value of the residual loan increased from £707,000 to nearly £1.2million.

Sir David initially lent the £2.3 million just weeks before the 2005 general election, to be repaid in 2007. It was secured by Lord Levy, Mr Blair’s personal fundraiser, and helped finance an 11th hour advertising offensive for the campaign.

At the time, Sir David was one of four lenders at the heart of the cash for peerages affair who were nominated for peerages for their service to the party.

Their nominations were blocked by the Lords after details of the loans – which were initially undisclosed – emerged. Sir David later asked for his name to be withdrawn.

Labour’s accounts also included a £1.65million donation from John Mills, the television shopping tycoon in the form of shares in his company JML.

However, Labour decided not to include any value of the 2.5 per cent stake in the accounts because it was in a private company and so difficult to trade in the future.

Labour stressed it would pay any tax that was due on the shares, either when they were sold or on dividend income from the shares.

Overall Labour topped the league for the highest political party income, taking in more than £33 million last year, leaving a “surplus” of £5.46 million.

The party last year paid corporation tax of just £14,000, despite declaring in its accounts that an “expected” tax at a rate of 20 per cent would have been £1.096 million.

However, after taking into account non-taxable income of £6.65 million and expenses not deductable for tax purposes of £5.57 million, the bill fell to £14,000.

A Labour spokesman said: “Corporation tax is paid on taxable profits. We have not made any taxable profits because we are a not-for-profit organisation.

The Conservatives' accounts show that it paid £187,000 in tax, after an income of £25.3 million and a “surplus” of £2.03 million.

The Tories’ accounts show party is debt-free for the first time in nearly two decades.

The party’s 2013 report and accounts show that the party paid off £4.4million in loans since the beginning of 2013 and the end of last month.

It said: “This means that for the first time since 1995 we do not have any outstanding external debt beyond constituency association loans.”

The Liberal Democrats brought in £7.3million income and spent £6.8 million.